Getting started with the 340b program

If your hospital isn’t already 340B registered and eligible, you might want to refer to our previous blog post, Are you ready to enroll in the 340B program?

What is a Specialty Pharmacy?

The National Association of Specialty Pharmacy defines a specialty pharmacy as a state-licensed pharmacy that solely or largely provides medications for people living with serious health conditions requiring complex therapies. These may include:

Cystic fibrosis
Hemophilia/other bleeding disorders
Human growth hormone deficiencies
Multiple sclerosis
Organ transplantation
Rheumatoid arthritis

Specialty Drugs: Overview

Specialty drugs, which Medicare defined in 2019 as any drug costing more than $670 monthly, constituted about 50% of the overall prescription drug market’s expenditures (some $161 billion) in 2020   — up from 29% of total expeditures in 2015. Moreover, according to Acentrus Specialty, 8 out of 10 new drugs approved by the FDA in 2020 were specialty drugs. That makes specialty drugs the fastest growing and largest part of the prescription-drug market.

Benefits of contracting with specialty pharmacies for 340B prescriptions

Dramatic 340B savings

The number one benefit of contracting with a specialty pharmacy, where your health system’s mission is concerned, is the significantly increased potential for generating savings, and for passing-along those savings to patients in need. Today, hospitals and other 340B covered entities can acquire many specialty drugs for as little as 1¢ — which happens when a drug has hit its 100% Medicaid rebate cap.

For instance, Humirathe top-selling drug in the U.S., hit the rebate cap in 2016. Since that time, 340B hospitals have been able to buy Humira, and many other specialty drugs — including Epclusa, Harvoni, Imbruvica, Iressa, Gilenya, Revlimid and Stelara — at significantly-reduced prices.

That said, it’s important that you’re aware of a specialty pharmacy’s insurance relationships before contracting with it as a 340B pharmacy for your health system. Why? Because insurance companies dictate which specialty pharmacies can dispense 340B-eligible specialty drugs.

Fewer locations than 340B retail pharmacies

It’s been estimated that specialty pharmacies account for more than 20% of all contract pharmacy relationships with 340B hospitals and other covered entities, but they account for only 1% of 340B contract pharmacy locations.

Specialty pharmacies usually ship drugs directly to hospitals or patients, rather than filling them on-site in retail pharmacies — which means location isn’t an important consideration. Moreover, fewer locations typically means a lower resource investment for covered entities — in addition to the higher potential 340B savings on specialty drugs.

Fewer 340B-eligible claims, higher net savings

Given the significantly higher average cost of specialty drugs, margins for covered entities on 340B discounts are equally higher. According to a drug trend report by Evernorth, specialty drugs were used by less than 2% of the population in 2020, but accounted for more than 50% of prescription spending.

Several online sources estimate that, while the average retail pharmacy prescription in 2020 cost $566 per month, the average specialty drug prescription cost $6,565. In a September 2021 article, AARP estimated that, in 2020, the average annual cost for one specialty medication used on a chronic basis was $84,442.

The savings margins generated by specialty drugs, therefore, significantly increase a 340B-covered entity’s opportunities to fill the revenue gaps inherent to their business models and, at the same time, subsidize their Patient and Charity care programs.

340B exposure risk is decreased.

It stands to reason that fewer claims means less exposure to potential audits and compliance claims. Moreover, most specialty pharmacies have dozens, even hundreds, of 340B contract pharmacy relationships; which means that they’re highly experienced, and educated, in maintaining 340B compliance for the covered entities they serve.

Why your 340B hospital should have an onsite Specialty Pharmacy

As we’ve detailed at length in another post, the primary reasons every 340B hospital should consider having its own onsite specialty pharmacy are:

  • Better Outcomes. Better Incomes.
  • Streamlining 340B Patient Care
  • Enhancing Medication Adherence Among 340B Patients
  • Expanding Access to Specialty Medications for 340B Patients
  • Cost Savings and Financial Sustainability
  • Improving Patient Satisfaction
  • Facilitating Clinical Research and Innovation
  • Leveraging Data Analytics and Patient Outcomes
  • Overcoming 340B ESP and drug manufacturer restrictions

In addition to exploring, in depth, the advantages noted above, that blog post details the process for starting a specialty pharmacy and paying for it — by 1) Optimizing your 340B program’s savings, and 2) Using your health system’s retail pharmacy revenue.

NOTE: For additional information, please refer to our post Best Practices For A 340B Hospital Looking To Build An Onsite Specialty Pharmacy — a roundtable discussion among three ProxsysRx corporate executives which is also available in video on our YouTube channel.

Optimizing your (offsite) 340B specialty pharmacy program

If your health system has determined that an onsite specialty pharmacy is beyond its resources and capabilities, here are guidelines you should follow for optimizing your 340B specialty pharmacy program:

In the typical health system, the majority of specialty prescriptions are written by the following clinics: Dermatology, gastroenterology, rheumatology, endocrinology, neurology and oncology.

Medications dispensed through these clinics have high utilization rates, and yield equally high 340B savings. Which is why the first, and most important, step in optimizing your specialty-pharmacy 340B program is to ensure that the clinics writing the most specialty prescriptions in your system are eligible and registered.

Establishing your 340B specialty network

When you’re developing a specialty network tailored to your covered entity’s needs, consider the following:

340B therapies

Make sure your specialty pharmacy network accommodates the therapies that your covered entity utilizes, in order to capture the appropriate specialty drugs.

340B payers

Make sure your pharmacy network includes payer-mandated pharmacies.

Specialty Pharmacy 340B workflow

Register every location that your specialty pharmacies use in your 340B network, to catch potential volume-balancing prescription transfers.

340B qualification rule sets

For your 340B specialty program, you’ll want to do the following

  • Work with your third-party administrator (TPA) to identify your high-volume specialty prescribers.
  • Extend eligible-date windows to account for longer timelines associated with prior authorizations and medical benefit eligibility checks.
  • Ensure that your prescribers are adhering to your defined workflows, and meeting all charting requirements.
  • Make sure your qualifications account for all delivery-channels through which prescriptions are sent to your pharmacy partners — including fax, EMR and pharmacy hub.

Complex 340B specialty workflows

Custom rulesets bring more complex workflows, which increases the likelihood for claims to fall through the proverbial cracks. Make a concerted effort to identify those situations, and create partial matching rules — such as by therapy or prescriber — then thoroughly review them for qualification.

Current 340B replenishment-savings rates

It’s been estimated that up to 10% of all 340B specialty catalog pricing is inaccurate. Which is why it’s so important to routinely audit catalog pricing, to ensure that you always have current 340B pricing for specialty drugs.

ProxsysRx is here to help, if you have questions.

These are just a few of the ways you can optimize your 340B specialty drug program savings and benefits. For more information on the full range of steps you can take, contact Howard Hall. C: 214.808.2700 |